Debt-ridden Portugal, Greece, and Ireland are in a difficult position — failure to produce sweeping fiscal reforms will upset the bond markets, but cuts cutting will likely result in uncompetitive levels of economic growth.

Portugal was able to auction off 1 billion euros of bonds due in 2012, at higher borrowing costs.

The euro eased to $1.3920 versus the dollar, after challenging a recent 4-month high of $1.4035 in the previous session.

The dollar firmed amid the release of data showing U.S. producer prices increased by much more than expected in February. The Labor Department said its producer price index jumped by 1.6 percent in February following a 0.8 percent increase in January.

Eurozone inflation breached the European Central Bank (ECB) target for a third straight month in February due to higher energy prices.